Armenia's Economic Pulse

[Zeytun]

Re: Armenia's Economic Pulse

The IT sector in Armenia has grown by 25% per year


This article has been translated from Russian to english using google
IT sector of Armenia in 2015 increased by 25%. According to the strategy of development of information technologies in 2018 the turnover of IT sector will reach $ 1 billion.

Revenues from the IT sector in Armenia in 2015 increased by 25%. This figure was announced executive director of the Union of Information Technology Enterprises (UITE) Karen Vardanyan. He added that these figures show that in recent years the IT sector in the country is steadily growing, "This is the average growth of the IT industry over the past decade. The exception was 2009, when the growth was 14%. "

Director of UITE growth trend explained by the fact that the IT industry in Armenia increasingly focused on exports. In addition, he said, the world continues to grow demand for programmers, engineers and other related specialties.

"The number of vacancies in the IT sector worldwide today is about two million. By 2018, this figure could rise to three million. The more specialists we prepare, the more work ", - says Vardanyan.

Head of UITE also noted that the positive impact on the IT sphere of Armenia will provide the World Congress on Information Technology (WCIT), which was first held in Yerevan in 2019. At the Congress will come to high-level representatives of leading IT companies from 80 countries. The event of this scale will give the chance to the Armenian IT companies to present their products. One of the objects of pride of the Armenian IT sector, according to Vardanian, is a project to equip schools specialized incubators in which students can conduct experiments.

"The Congress will allow Armenian IT companies to expand international cooperation. Our trump card may be the presence of engineering labs in all schools in Armenia. By 2019, we will be the only country in the world, in which all schools will be equipped with such laboratories "- said Vardanyan.

Organization of Congress will cost $ 3 million. According to statistics, in 2015, Armenia has about 500 IT companies. The share of IT sector in Armenia's GDP is about 4%. According to the strategy of development of information technologies in 2018 the turnover of IT sector will reach $ 1 billion.

[Zeytun]

Re: Armenia's Economic Pulse

I didn't bother highlighting the important parts, because it's pretty much all important parts

A quick summary though
Positive conditions: favorable business climate
Negative condition: high level of external and foreign currency debt

2014 Exports: 22% Copper, 26% other metals, like gold

2015 GDP growth 2.7%

2014 Remittance were 17.5% of GDP, 14% coming from Russia
Remittance dropped 33%, meaning about a 5-6% hit to the GDP, Copper dropped 28%

Imports dropped 26%, while exports dropped 1%. MAJOR benefit to our trade imbalance which before stood at 3:1. This means its a lot closer to 2:1 now

2016 expected GDP growth 2%, 2017 2.8%


Current Account deficit
2014 4.3% of GDP, 2015 4.3%

Foreign Exchange Reserves
rose from 1.26 billion in February to 1.77 billion in December, mostly because of loans


Net external debt is 46.5%
Refinancing policy 8.75%, down from 10.25%

2014 budget deficit was 1.9%
2015 was 4%, when target was 2.3%
2016 target is 3.5%

Dollarization of deposits: 65%

Public Debt
end of 2014 stood at 43.6%, now at 47.8%

85% of govt debt stock in foreign currency

investment to GDP ration
2015 19%
2008 was 36%

Industries | Fri Jan 22, 2016 4:10pm EST Related: FINANCIALS
Fitch Affirms Armenia at 'B+'; Outlook Stable

Thank you for the summary.

[Mher]

Re: Armenia's Economic Pulse

I didn't bother highlighting the important parts, because it's pretty much all important parts

A quick summary though
Positive conditions: favorable business climate
Negative condition: high level of external and foreign currency debt

2014 Exports: 22% Copper, 26% other metals, like gold

2015 GDP growth 2.7%

2014 Remittance were 17.5% of GDP, 14% coming from Russia
Remittance dropped 33%, meaning about a 5-6% hit to the GDP, Copper dropped 28%

Imports dropped 26%, while exports dropped 1%. MAJOR benefit to our trade imbalance which before stood at 3:1. This means its a lot closer to 2:1 now

2016 expected GDP growth 2%, 2017 2.8%


Current Account deficit
2014 4.3% of GDP, 2015 4.3%

Foreign Exchange Reserves
rose from 1.26 billion in February to 1.77 billion in December, mostly because of loans


Net external debt is 46.5%
Refinancing policy 8.75%, down from 10.25%

2014 budget deficit was 1.9%
2015 was 4%, when target was 2.3%
2016 target is 3.5%

Dollarization of deposits: 65%

Public Debt
end of 2014 stood at 43.6%, now at 47.8%

85% of govt debt stock in foreign currency

investment to GDP ration
2015 19%
2008 was 36%

Industries | Fri Jan 22, 2016 4:10pm EST Related: FINANCIALS
Fitch Affirms Armenia at 'B+'; Outlook Stable

(The following statement was released by the rating agency) LONDON, January 22 (Fitch) Fitch Ratings has affirmed Armenia's long-term foreign and local currency Issuer Default Ratings (IDRs) at 'B+' with a Stable Outlook. Fitch has also affirmed the issue ratings on Armenia's senior unsecured foreign currency bonds at 'B+'. The Country Ceiling has been affirmed at 'BB-' and the Short-term foreign currency IDR at 'B'. KEY RATING DRIVERS The 'B+' rating reflects the following factors: Armenia's ratings are supported by its relatively high human development and governance indicators, favourable business climate and increasing economic resilience. However, they are weighed down by vulnerabilities to external shocks, high levels of external and foreign currency debt and political risks. The Armenian economy is vulnerable to external shocks and has been adversely affected by the recession in Russia and drop in global commodity prices, which caused severe financial pressure in late 2014 and a sharp contraction in domestic demand in 2015. In 2014 Russia accounted for 80% of remittances (14% of GDP), 20% of exports and 44% of FDI; while copper accounted for 22% of exports, and other metals, minerals and gold for another 26%. Total remittances dropped by 33% YoY - the equivalent of 4.5% of GDP - in the first three quarters of 2015, while copper prices were down 28% YoY in December 2015. However, Armenia has proved remarkably resilient to the magnitude of this shock, reflecting a strong trade performance, access to international financing and an effective policy response, under the aegis of an IMF programme. Nevertheless, with oil prices, the Russian rouble and copper prices well below their average 2015 levels and still under downward pressure, it is too early to declare the external shock over, in Fitch's view. Fitch estimates GDP growth was 2.7% in 2015, revised up from its forecast of 1.5% in July. It estimates domestic demand fell by 4.9%, but net trade underpinned growth. Imports dropped 26% YoY (in USD terms) in the first three quarters of 2015, while exports fell only 1%, supported by the opening of the Teghut copper mine and strong growth of agriculture output. Fitch forecasts GDP growth at 2% in 2016, before picking up to 2.8% in 2017, but the outlook depends on external conditions. The remarkable rebalancing of the economy and access to funding has eased pressures on Armenia's external finances. Fitch estimates the current account deficit narrowed to 4.3% of GDP in 2015, from 7.3% in 2014, despite the drop in remittances. Foreign exchange reserves recovered to USD1,771m in December 2015 from USD1,261m in February 2015, helped by the issue of a USD500m eurobond in March (USD300m net of the buyback of the eurobond due in 2020), USD100m from the Eurasian Fund for Stabilisation and Development as well as funding from the IMF and World Bank. Nevertheless, net external debt is high, at an estimated 46.5% of GDP at end-2015, compared with the 'B' category median of 21.5%. The dram has been fairly stable against the USD following a 14% depreciation between October 2014 and February 2015. Inflation declined to 1.2% in November 2015, and the central bank (CBA) cut its refinancing policy interest rate to 8.75% from 10.25% in October. The banking sector had a capital adequacy ratio of 15.9% as of end-October 2015 and will raise further capital to manage the increase in minimum capital ratios to AMD30bn from AMD5bn. Bank credit growth has slowed sharply after prior rapid expansion. Non-performing loans increased to 8% in October 2015, from 6.7% a year earlier, although the CBA estimates this is equivalent to 3.8% on international definitions. Nevertheless, dollarisation of deposits and loans is high at around 65%, exposing the system to exchange rate depreciation. Fitch estimates the budget deficit widened to 4% of GDP in 2015, from 1.9% in 2014 and compared with a budget deficit target of 2.3%. The deterioration reflected weaker-than-expected growth as well as policy measures to support the economy and social protection, including to eliminate the minimum profit tax, reduce the turnover tax rate, extend VAT payment dates on imports from the Eurasian Economic Union (EEU) and a subsidy to compensate some consumers for the increase in electricity tariffs. Nevertheless revenues held up well given the magnitude of the fall in domestic demand (the tax-rich part of GDP). However, the government also increased net lending to the economy, representing a quasi-fiscal policy loosening. The 2016 budget envisages a narrowing of the deficit to 3.5% of GDP, helped by an increase in excise duties in May. Public debt increased to an estimated 47.8% of GDP at end-2015, from 43.6% at end-2014, below the 'B' category median of 52%, but above the 'BB' category median of 44%. Some 85% of government debt stock is in foreign currency, exposing Armenia to exchange rate depreciation, but it has a long average maturity of 9.7 years and much of it is concessional at low interest rates. The IMF has revised down its estimates of medium potential growth to 3.5%, from 4.5%-5% before the shock, partly reflecting the outlook for Russia and commodity prices. The ratio of investment/GDP declined to an estimated 19% of GDP in 2015, from an average of 36% in 2005-2009. Armenia improved its ranking in the World Bank Doing Business Survey to 35th in 2015, from 38th in 2014, although the survey does not fully capture factors such as weak competition and geographic isolation. The government is planning reforms to the tax code and business regulations and inspections. Armenia's referendum on constitutional reform on 6 December 2015 was approved with 66.2% of votes on a turnout of 50.5%, just above the required 50% threshold. However, independent observers allege cases of irregularities. EU and US statements called on the Armenian authorities to fully investigate credible fraud allegations in a transparent manner. The constitutional amendments will reduce the powers of the presidency and increase those of parliament. Armenia's geopolitical environment weighs on the rating. The latent conflict with Azerbaijan over the disputed Nagorno-Karabakh region entails the tail risk of escalating. No resolution is expected in the near term. Armenia's close relations with Russia have been strengthened further by Armenia's accession to the EEU. However, Armenia retains strong trade access to the EU. RATING SENSITIVITIES The Stable Outlook reflects Fitch's assessment that upside and downside risks to the rating are currently balanced. The main risk factors that, individually or collectively, could trigger positive rating action are: - An improvement in external economic conditions, for example a recovery in the Russian economy, or Armenia's sustained resilience to them. - A decline in the government debt-to-GDP ratio. The main risk factors that, individually or collectively, could trigger negative rating action are: - Severe adverse spill-over from worsening economic conditions in Russia or lower commodity prices. - A marked drop in foreign exchange reserves. - Fiscal slippage leading to a significant rise in the government debt-to-GDP ratio KEY ASSUMPTIONS Fitch assumes that Armenia will continue to experience broad social and political stability and no significant escalation in the conflict with Azerbaijan regarding Nagorno-Karabakh.

http://www.reuters.com/article/idUSFit947011

[HyeSocialist]

Re: Armenia's Economic Pulse

Jan 21 Ameriabank, Armenia's biggest bank by assets, is making plans for a potential stock market listing in London as it pursues a domestic expansion drive after a $40 million investment by the European Bank for Reconstruction and Development (EBRD).

The EBRD is taking a 20 percent stake in Ameriabank to help to support its growth by providing funds for lending to small business, big local companies and retail customers.

"Our aspiration is an IPO (initial public offering) and to try to triple our balance sheet in the next three years," Ameriabank Chairman Andrew Mkrtchyan said, adding that it has begun negotiations with investment banks to appoint an adviser with a view to listing in the next two to three years. The bank did not provide an estimate of a potential valuation.

Mkrtchyan said the bank, which has total capital of 182 million dollars and about $1 billion in total assets, is looking to further its expansion with acquisitions in its home market in the first half of the year, with the focus on profitable smaller players.

The Armenian banking sector comprises 21 lenders, serving a population of about 3.2 million people.

In addition to the EBRD investment, the World Bank's International Finance Corporation is providing a $50 million loan to help Ameriabank to boost lending to local businesses and bolster economic growth in the former Soviet republic.

Like other former Soviet states, Armenia has been hit by the economic downturn in Russia, though the International Monetary Fund said in September that it expects increased growth this year.

http://www.reuters.com/article/armenia-ameriabank-ipo-idUSL8N1541SX

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Armenia could build a financial center being in the middle of India, Iran, Russia, and the EU.

[HyeSocialist]

Re: Armenia's Economic Pulse

[B]India, Armenia to sign farm pact in February[\B]

India and Armenia will sign an agreement on agriculture on February 19 when the Armenian Minister for Agriculture, Sergo Karapetyan, visits India.

Last July, India had given the go-ahead for signing and ratification of an inter-governmental agreement between the two counties.

“We are very interested in familiarising ourselves with the research and development potential of agriculture in India. We are also interested in the potential of your manufacturing and agriculture techniques. Traditionally we have been importing from Russia and Belarus. Now, our farmers are showing interest in Indian manufacturing,” Armen Martirosyan, Ambassador of the Republic of Armenia, told The Hindu on Friday.

Inviting Indian companies to invest in Armenia, he said bilateral trade between the two countries was only $70 million to $75 million while trade with China was almost $380 million. “The newly-built transport network, however, is more conducive for India,” he said.

Trilateral cooperation

“The recent lifting of sanctions might facilitate trilateral cooperation between India, Iran and Armenia,” he said at a meeting organised by FICCI.

Mr. Martirosyan said Indian companies could invest in manufacturing sector, pharmaceuticals, gems and jewellery, in the Armenian free economic zones.

A FICCI delegation focussing on the media, entertainment and tourism sector is set to visit Armenia between 15 and 19 July.

http://www.thehindu.com/news/cities/chennai/india-armenia-to-sign-farm-pact-in-february/article8146647.ece

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Definitely a nation that Armenia should work with. From attracting medical students and cooperating in IT to agriculture.

[Mher]

Re: Armenia's Economic Pulse

Iran Sanctions Relief ‘Major Opportunity For Armenia’

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Tatevik Lazarian
Հրապարակված է՝ 19.01.2016

The lifting of international sanctions against Iran has opened up “quite a few interesting opportunities” for Armenia’s economy, a senior official from the World Bank said on Tuesday.

Laura Bailey, the head of the bank’s Yerevan office, said the development could speed up the implementation of Armenian-Iranian energy projects, facilitate trade between the two neighboring states and turn Armenia into a commercial bridge between Iran and the Russian-led Eurasian Economic Union (EEU).

Speaking to RFE/RL’s Armenian service (Azatutyun.am), Bailey argued that Armenia is the only EEU member state bordering Iran. She suggested that other EEU member states might therefore “invest here to work with Iran.”

“It may also be the other way: that Iran may wish to trade with the EEU and Armenia may pave the way for Iran,” she added.

Immediately after Iran reached in July a landmark deal with world powers on its controversial nuclear program, the Armenian government proposed that the EEU explore the possibility of negotiating a free trade agreement with the Islamic Republic.

Deputy Foreign Minister Shavarsh Kocharian said in September that the EEU’s executive body and member states agreed to set up a task force that will weigh up potential economic benefits and risks of such an agreement. “Iran has always shown an interest in this matter,” he said.

According to government statistics, Armenia’s trade with Iran totaled a modest $250 million in January-November 2015. This figure should rise significantly after the construction of a new high-voltage transmission line that will connect the power grids of the two countries. It is designed to sharply increase Armenian electricity exports to Iran and Iranian gas supplies to Armenia.

Work on the transmission line began late last year and is due to finish in 2017. Armenian officials have expressed hope that the lifting of the sanctions will also allow the Iranian side to finance the $350 million construction of a major hydroelectric plant on the Armenian-Iranian border.

Bailey described information technology (IT), the fastest growing sector of the Armenian economy, as another potential area of closer Armenian-Iranian cooperation. “This could be quite a strategic advantage for Armenia,” she said.

http://www.azatutyun.am/content/article/27497313.html

[Mher]

Re: Armenia's Economic Pulse

World Bank Confident About Armenian Exchange Rate


Tatevik Lazarian
Հրապարակված է՝ 19.01.2016

The Armenian dram’s value against the U.S. dollar will likely remain stable despite the continuing depreciation of the Russian ruble, a World Bank official said on Tuesday.

Armenia’s national currency weakened by over 15 percent against the dollar in late 2014 amid a sharp fall in dollar-denominated remittances from Armenian migrant workers in Russia resulting from the collapse of oil prices. The Central Bank of Armenia managed to stop the dram’s depreciation by sharply raising interesting rates and tightening minimum reserve requirements for commercial banks.

The dram weakened against the dollar by less than 2 percent in the course of 2015, making it the most stable currency in the former Soviet Union. Its exchange rate remained virtually unchanged even after the drop in oil prices accelerated in October. By comparison, the Russian ruble has lost a further 20 percent of its value against the dollar and the euro in the past three months.

“In the current situation I do not think the dram is jeopardized,” Laura Bailey, the head of the World Bank office in Yerevan, told RFE/RL’s Armenian service (Azatutyun.am).

Bailey insisted that Russia, Azerbaijan and other oil-rich ex-Soviet states have seen their national currencies plummet in value because of their heavy dependence on oil revenues. “I am very happy to say that I do not see that we are faced with that kind of vulnerability [in Armenia,]” she said.

In recent months, there have been no indications that the Central Bank of Armenia has resorted to heavy dollar interventions in the domestic currency to shore up the dram. In a further sign that the dram is not under strong pressure, the bank repeatedly cut its refinancing rate in the second half of last year.

The benchmark rate currently stands at 8.75 percent, down from 10.5 percent in August 2015.

http://www.azatutyun.am/content/article/27497395.html

[Haykakan]

Re: Armenia's Economic Pulse

EEU READY TO DISCUSS FREE TRADE AGREEMENT WITH HONG KONG: OFFICIAL

January 18, 2016 - 16:50 AMT

PanARMENIAN.Net - The Eurasian Economic Union is interested in
expanding east and signing a free tradeagreement with Hong Kong,
RT cited Russia's Deputy Prime Minister as saying.

"We recently concluded the free trade zone agreement between the
Eurasian Economic Union and Vietnam and are currently negotiating
with Israel," Arkady Dvorkovich said. "We are ready to discuss this
issue with Hong Kong."

The Eurasian Economic Union is an economic union of states located
primarily in northern Eurasia. A treaty aiming for the establishment
of the EEU was signed on May 29, 2014 by the leaders of Belarus,
Kazakhstan and Russia, and came into force on January 1, 2015.

Treaties aiming for Armenia and Kyrgyzstan'saccession to the Eurasian
Economic Union were signed on October 9, 2014 and December23, 2014,
respectively. Armenia and Kyrgyzstan's accession treaties came into
force on January 2, 2015 and August 6, 2015.

[HyeSocialist]

Re: Armenia's Economic Pulse

Thanks for that ......... and we should not be afraid or hesitate from technology.

If the government can budget subsidies they should make available for training/equipment.

Also not only to their cronies and oligarchs but to the average grower ... to be defined.

As far as cost of equipment/investment it is immaterial .
What matters is payback period based on output since they will should be grown for export and foreign currency.

.

That's largely my point. Armenia has what, 40% of workforce allocated to agriculture? For average industrialized countries this is 1-5%, Israel has about a 10% of participate rate in Agriculture. Proper governance and introduction of technology and training should reduce the workforce participation in agriculture to about 10% so more folks can go into high profitable industries like light manufacturing or service.

[londontsi]

Re: Armenia's Economic Pulse

some of the technology you mentioned actually gets used, but only by very few large companies. There's a lot that needs to reformed and improved in Armenian agriculture. the amount of food that gets produced but never sold or consumed is hard to believe. There's a lot of shortcoming in quality control, in efficiency, and in distribution.

Thanks for that ......... and we should not be afraid or hesitate from technology.

If the government can budget subsidies they should make available for training/equipment.

Also not only to their cronies and oligarchs but to the average grower ... to be defined.

As far as cost of equipment/investment it is immaterial .
What matters is payback period based on output since they will should be grown for export and foreign currency.

.